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IRR Calculator

Calculate Internal Rate of Return for investments with irregular cashflows.

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πŸ’‘ Expert Tips

1

IRR above 12% generally beats market returns.

2

Compare IRR to your opportunity cost.

How to read your result

IRR answers 'what constant annual return would make this exact series of cash flows break even' β€” it's most useful for comparing investments with irregular, uneven cash flow timing (not a simple lump sum), where a simple CAGR calculation wouldn't accurately capture the timing of when money went in and came out.

⚠️ Common Mistakes

βœ• Entering cash flows in the wrong sign convention (outflows should typically be negative).

βœ“ Money invested (outflows) and money received back (inflows) need consistent, opposite signs for the calculation to make sense β€” mixing this up produces a meaningless or misleading result.

βœ• Comparing IRR across investments with very different cash flow patterns and treating it as directly equivalent to CAGR.

βœ“ IRR and CAGR answer subtly different questions β€” IRR accounts for the timing of multiple cash flows, while CAGR assumes a simple start and end point. They can differ meaningfully for the same underlying investment.

Frequently Asked

What is IRR?β–Ύ

The discount rate that makes NPV of all cashflows equal to zero. Higher is better.

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Compound Interest Calculator

Example 1 β€” Lump sum, no contributions

A = 1,00,000 Γ— (1.10)^10 β‰ˆ β‚Ή2,59,374 β€” more than 2.5Γ— growth

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